Thursday, 10 December 2009

"Cost of living" index replaces "calorie intake" index to calculate India's poor

A committee headed by economist Suresh Tendulkar critically examined the old “Dandekar-Rath” poverty-line formula, drawn up in 1971. That formula looked exclusively at the calorie content of an Indian’s diet; and, if it was lower than 2250 calories per person per day (an arbitrary figure), placed that person below the poverty line. Remember: this was before the green revolution, well before liberalisation. The committee recommended scrapping the focus on calorie intake alone; it should be replaced, according to the report, by a cost-of-living index that took into account other expenditure.

The number of poor people in India in 2004-2005 were 27.5% by the calorie intake calculation. Now that figure has been revised to 37.2%. And that is good news.

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